In the Pakistani capital Islamabad, adverts for terrorism insurance can be seen throughout the city. The National Bank of Pakistan’s Protection shield insurance scheme adverts offer coverage for a wide range of disasters with the most visible being terrorism insurance. There is even a fine print at the bottom of the ads, probably to prevent terrorists from using insurance as a money-making scheme, makes sure to add, “provided the insured is not directly involved in these activities.”
The NBP, according to a public-relations official at the bank, is operating the Protection Shield scheme in conjunction with American Life Insurance Company (Pakistan) Limited. He says that terrorism was added to the list of calamities under which beneficiaries could claim insurance in 2005. For a sum of Rs 20 a month, the policy pays out insurance of Rs 200,000 (1,639.33 EUR).
In the last couple of years there has been a boom in insurance companies offering coverage to those fearful of terrorism. In 2010, Allied Bank inked a deal with the New Hampshire Insurance Company to provide insurance to individuals who lost their lives or suffered damages in acts of terrorism. Other companies that offer insurance against terrorism include the State Life Insurance Corporation of Pakistan, which witnessed a nearly 50% increase in sales in the two years since terrorism insurance was started, New Jubilee Insurance and the National Insurance Company Limited (NICL).
Farid Khan, a human resource manager at a private company, says that the recent rise in terrorism insurance is a way for the insurance industry to pull itself out of the doldrums. “Life insurers have to come up with new ways to convince people that they need insurance. Right now, playing on fears of the security situation is the best way to do that. This is basically a marketing method.” Farid points out that less than one per cent of the population has any form of insurance so fears of terrorism can be a good way of penetrating the market.
NICL even provides terrorism insurance to foreigners travelling to Pakistan and has an expanded definition of “terrorism acts” which, apart from including militant attacks, also covers gang rape and civil commotion. A human-resources official at NICL, speaking under condition of anonymity, says that the policy was slightly amended recently, after reports of Blackwater and CIA agents operating in the country began to surface.
The NICl policy now does not provide coverage to foreigners who have “engaged in any kind of spying activity or on secret assignments”, those who “are guest military troops on any kind of declared or undeclared activity” and those who are “engaged in any activity that is against the interests of the state.” The official said they had not yet had any case of foreigners claiming insurance for anti-state activity and that the company would decide how to interpret the phrase.
Even foreign companies are trying to get in to the terrorism insurance business. Siegfried Busch, a Swiss reinsurance company, made a presentation to the Pakistan Insurance Institute, according to a insurance executive who was present at the meeting.
The executive says that, among the proposals made by Siegfried Busch was that the insurance companies to lobby the government to make terrorism insurance mandatory for all citizens of Pakistan, possibly by including monthly payments to utility bills. The executive also provided a copy of the power point presentation made by Siegfried Busch to The Express Tribune. Other proposals included separating terrorism insurance from all other forms of life insurance and getting the government to be a re-insurer of the last resort.
The Pakistan Insurance Institute hasn’t yet acted on Seigfried Busch’s recommendations, says the executive, because it would require all the insurance companies to pool their insurance policies and re-insure it with the Swiss company.
Source : Tribune
